Aug. 5 (Bloomberg) -- Four stock promoters made $2.5
million manipulating the share price of companies including two
they claimed were capitalizing on growth in the medical
marijuana industry, the U.S. Securities and Exchange Commission
said.

Mikhail Galas, 25, Alexander Hawatmeh, 24, and Chris
Mrowca, 25, and a fourth man bought stock in companies including
Growlife Inc. and Hemp Inc., promoted them online, then dumped
the shares once they rose, the SEC said in a lawsuit filed today
in federal court in Tacoma, Washington. Galas, Hawatmeh and
Mrowca also face related criminal charges, the Justice
Department said in a separate statement.

As more states have legalized the drug, at least 130 penny-stock companies that claim to be in the pot business have
emerged with a market capitalization of more than $7 billion as
of May, according to data compiled by Bloomberg. The SEC warned
investors that month that the industry was vulnerable to fraud.
Last year, it formed a task force dedicated to cleaning up the
market for penny stocks.

Growlife, which operated seven marijuana supply stores in
five states and was losing money as of June, is still worth
about $65 million on paper even after trading in its shares was
temporarily suspended by the SEC, Bloomberg data show.

The Justice Department said the three are all in custody.
The SEC said the individuals have no known defense counsel.